COBRA Subsidy Expires Sept 1

September 1, 2011

Last year, we wrote about how the American Recovery and Reinvestment Act (ARRA) included a COBRA subsidy that reduced the amount certain laid-off workers pay for health benefits by 65%. Without the subsidy, those workers would have been responsible for the entire cost of continuing to receive health benefits from their former employers. 

Because enrollment for the subsidy was closed at the end of May, 2010, and because the subsidy was available for up to fifteen months after termination of employment, September 1 marks the date on which the subsidy expires for the last remaining workers taking advantage of the subsidy. An exception would be where a worker was terminated before May 31, 2010 but did not receive COBRA benefits until a later date. For example, if an individual was involuntarily terminated on  May 31, 2010 and, due to the terms of a severance agreement, their COBRA coverage did not start until November 1, 2010, he or she would still be eligible for the full 15 months of subsidy through January 31, 2012

Because COBRA is typically expensive without the subsidy, it is expected that many unemployed workers will go without health insurance, especially in light of the Commonwealth’s termination of the adultBasic program last May. Some unemployed workers may find some relief with the Health Coverage Tax Credit, but availability is limited because of strict eligibility requirements. Also, unemployed workers with children should look into the Pennsylvania CHIP program, which generally covers all uninsured children and teenagers in Pennsylvania.